Solana Q1 2025 Staking Report: Analyzing the Solana staking ecosystem from aspects such as fee model, protocol progress, and governance.

Written by: IceStaking

Compiled by: Glendon, Techub News

The Solana ecosystem has recently experienced the most active governance event in its history, with the TVL reaching approximately $11.8 billion in January this year, setting a new historical high. Meanwhile, the validator economic model has also undergone significant changes. This article will focus on analyzing the data and information that SOL holders need to understand.

As of the first quarter, 60% of the total supply of SOL was staked, reflecting holders' long-term confidence in the network. The number of liquid staking tokens (LSTs) also showed an upward trend; at the beginning of the first quarter, LSTs accounted for 8% of all staked SOL. By the end of the quarter, this proportion rose to 10-12%, indicating a growing demand for liquidity yield strategies in the DeFi space.

Among all protocols, Jito firmly holds a dominant market position with approximately 40% of the LST market share and about 30% of Solana DeFi TVL.

Other major protocols, such as Marinade, will focus on institutional staking services; Sanctum's Infinity Pool supports many protocols participating and drives new competition in the LST market.

Current Earnings Status:

The annual percentage yield (APY) for native staking remains around 7-8%;

LSTs break through 10% through MEV and priority fee mechanisms like Jito TipRouter.

These improvements indicate that the Solana ecosystem is providing more options to enhance user motivation to participate in staking.

Validator Network

The Solana validator network maintained strong growth in the first quarter and is globally distributed, with over 1,400 validators and more than 4,000 nodes (including RPC), demonstrating high operational resilience of the network. According to the Nakamoto Coefficient, as of the first quarter, this coefficient remains at 20, which means that the top 20 validators must work together to stop the network (the Nakamoto Coefficient serves as a key indicator used to track how many validators are needed to control one-third of the total stake). This number reflects Solana's steady and gradual process of decentralization.

One of the main driving factors affecting validator performance is the continuously rising TVL of SOL. Driven by the price of SOL (which is expected to rise to $250 in January 2025) and the activity in DeFi and LSTs, the value of staked SOL surged significantly in the first quarter, leading to DeFi and staked TVL reaching as high as $11.8 billion, an increase of about $2 billion compared to the same period last year.

Currently, native staking remains more popular due to its simplicity and direct rewards. For example, Marinade's native staking has garnered attention with an annual yield of up to about 11% (the highest on Solana). Despite some progress, staking distribution is still relatively concentrated, with the top 30 validators holding 33% of the total stake, and the top 100 validators holding about 50% of the total stake. It is worth mentioning that staking pools are gradually diluting this concentration by distributing stakes to smaller validators.

In response to this challenge, the Solana Foundation has taken proactive measures to change the delegation model. In 2024, the foundation eliminated staking for underperforming validators that exploit fees (i.e., validators that charge a 100% commission). In the first quarter of 2025, the foundation's delegation will continue to support small independent validators that rank outside the top 30 (such as IceStaking) to average out staking across the network.

In addition, several investment funds participated in staking investments in the first quarter. The substantial investments from these institutions have been gradually accumulating since 2024, typically through custodial services, which has increased the staking amounts of large validators by millions of dollars. It can be observed that Solana's validator ecosystem is continuously expanding in both scale and complexity, and has introduced targeted policies, while institutional investors' interest is also growing.

The development of the Solana Ecosystem Protocol in Q1

This quarter has witnessed some creative contributions from Solana ecosystem protocols, ranging from MEV infrastructure to institutional staking access.

Jito: Keep leading the way

In January 2025, Jito launched TipRouter, an on-chain solution that returns priority fees to stakers. This feature has become the standard mechanism used by validators.

Jito operates with a 0% commission and offers 100% MEV rebates to stakers, allowing JitoSOL holders to achieve the best staking returns.

Jito has begun deploying a re-staking platform for launching the Node Consensus Network (NCNs) protocol, which is designed to allow stakers to access additional services beyond Solana.

Jito released an analysis report indicating that its LST - JitoSOL does not constitute a security under U.S. federal securities law.

According to the data, JitoSOL's TVL has reached a staking amount of 17 million SOL, Jito's re-staking TVL is approximately 2 billion USD, while TipRouter has generated about 350,000 USD in rewards through its platform.

Marinade Finance

Marinade Finance is a liquidity staking protocol in the Solana ecosystem that expands its business to institutional clients by integrating with custodians such as Zodia Custody and Copper, providing investment solutions for institutional investors. Marinade also collaborates with Griffain to enable direct staking through AI commands. Additionally, Marinade proposes to unlock a budget of 26 million MNDE for market makers to deepen MNDE liquidity on CEX, thereby driving overall growth in TVL.

SolBlaze

The liquidity staking protocol SolBlaze has launched the SOL Pay SDK, an open-source library for Solana payments in web browsers; SolBlaze has also released the Bliq protocol suite, allowing users to quickly issue and develop their LST, which includes tools like Bliq Create, Discover, and Sparks. All LSTs use SolBlaze validators (supporting 0% commission + MEV rewards). To increase the early adoption of Bliq, SolBlaze has initiated a $100,000 incentive program.

Sanctum

The Solana ecosystem LST protocol Sanctum created LST in February this year, allowing each validator to participate in DeFi activities while staking. Sanctum also focuses on developing its public liquidity pool "Infinity Pool (INF)", which aims to support exchanges between different LSTs.

Kamino Finance

In the first quarter, the Solana ecosystem's composable automated liquidity management protocol Kamino Finance expanded its JLP Multiply feature, allowing users to better control leverage positions in the Multiply Dashboard and supporting their choice of one-click leverage adjustment or manual debt management through the Loan Dashboard.

Laine

In March 2025, the validator Laine and stakewiz.com were acquired by the Canadian publicly listed company Sol Strategies, and at the same time, Laine's founder Michael Hubbard joined Sol Strategies as Chief Strategy Officer.

IceStaking

IceStaking has launched validators, and the staking volume of SOL in the first quarter has exceeded 100,000.

SIMDs governance work

The most important discussions in the first quarter of Solana revolved around the SIMDs proposal to change the economic model. The following text outlines the issues each proposal aims to address, the suggestions made, and the impact on the entire ecosystem.

SIMD 0228

Question: The existing inflation model is approximately 4.8% per year, and since it is "fixed," it will not be adjusted based on staking conditions—this means that more SOL will be issued at a constant rate. As the number of stakers increases, the reward distribution becomes more dispersed, resulting in lower yields.

Suggestion: Change the existing inflation model to an inflation mechanism that automatically adjusts the issuance based on the amount of SOL staked.

If more SOL is staked, the inflation rate will decrease (down to 1.5%).

If the staked SOL is low or insufficient, the inflation rate will automatically rise to maintain network balance.

Status: The proposal was rejected in March 2025 with 61.39% of the votes in favor. Nevertheless, this proposal has become the most active governance event in Solana's history.

Potential Impact: This proposal will prevent unnecessary SOL inflation on the network (which is very beneficial for long-term holders), but small validators strongly oppose it, fearing that a lower inflation rate will also reduce their income, making it difficult for them to survive in the game. Although the proposal did not pass, it did unite the entire ecosystem to do one thing - governance, which is the most important for any blockchain.

SIMD 0096

Question: Users pay priority fees to validators to expedite transactions, and 50% of these priority fees are retained by the validators, while the other 50% are destroyed, which also means that validators cannot receive the full value of helping the network run.

Suggestion: The SIMD proposed a simple proposal - to stop destroying the remaining 50% of the fees and return 100% of the priority fees to the validators.

Status: This SIMD was passed with a 77.7% approval rate in May 2024 and officially implemented on February 12 of this year.

Impact: The daily SOL burn amount has decreased from 18,000 SOL to 1,000 SOL; the validator commission rate has increased from 25.1% to 56.1%; the share of token holder earnings has decreased from 67% to 46%.

SIMD 0123

Question: Based on SIMD-0096, Solana's mechanism allows validators to receive 100% of the priority fees, but the issue is that one of the network participants, the staker, cannot earn more income.

Suggestion: This proposal aims to change the allocation method of transaction priority fees by introducing an optional system that allows validators to share a portion of the priority fees directly with stakers, in order to enhance staking rewards and reduce over-the-counter trading.

Status: The proposal was approved in March 2025, with a support vote of 74.91%.

Impact: This resolves the long-standing issue where stakers could not benefit from validator revenue. It gives SOL staking a dividend-like property, rather than just inflationary returns.

Infrastructure and Cost Economics

Solana has undergone significant changes this quarter, from improvements to the Solana client to the ongoing development of validator incentives, reshaping the way rewards are earned.

Client Upgrade: Transition to Multi-Client Architecture

In its initial years, Solana only ran on a single client from Solana Labs. By the end of 2024, things changed with the introduction of the validator client Agave by the Anza team (formed by former Solana Labs engineers).

By the first quarter of 2025, Agave v2.0 achieved an absolute majority adoption rate, meaning that most validators have upgraded to the Agave client.

Jump Crypto's Firedancer is continuing its testnet development. Firedancer is known for its speed and better performance, and many validators are choosing Firedancer as their testnet infrastructure while keeping Agave on the mainnet.

This multiclient transition in the Solana architecture (similar to Ethereum's approach) reduces the risk of single points of failure.

Fee Model and Commission Trends

In the first quarter, commissions can show a downward trend. Due to Solana's delegation policy, most validators have commissions between 0-5%, as the policy stipulates that staking cannot be delegated to validators with commissions exceeding 10%. This is good for stakers, but it also maximizes the reduction of validators' profits, making MEV and priority fees extremely important sources of income.

As for MEV, data from the first quarter shows that Solana's MEV revenue has reached a new high. Solana's main MEV infrastructure provider, Jito, reported that by the end of the first quarter, its fees and revenues exceeded $261 million.

Validator Distribution

Currently, Solana validators are spread across more than 45 countries/regions worldwide. As of March 2025, data shows that there are nodes on every continent, but the numbers vary greatly, with Germany alone having about 1,000 validators.

In order to address the excessive reliance on any region, the Solana Foundation's delegation strategy tends to support independent cloud service/Bare Metal server operators.

In the first quarter, Marinade also delegated 45% of its SOL stake to validators outside the top 100 to improve overall staking distribution. It can be observed that Solana's infrastructure is more robust than ever, with multiple production clients, an evolving fee model, and an inclusive delegation strategy.

Future direction

Examining the current development trend of the Solana ecosystem, it is evident that its staking economy is gradually evolving into a multi-interactive ecosystem, where staking rewards will largely depend on transaction fees and network activity, rather than just inflation returns. In terms of infrastructure evolution, Firedancer may present a clearer implementation path in the second quarter - as it is seen as a bridge between well-funded validators capable of affording supercomputing hardware and efficient small validators.

Jito Restaking will be launched at the end of the first quarter and has enabled the Tip Router NCN (Node Consensus Network). Currently, 1-2 NCNs are in operation. Although adoption is still in the early stages, the success of this experiment may provide guidance for the launch of other Restaking vaults in the coming quarters.

In terms of market participation structure, institutional investors are an important part of the first quarter, and with more custodial support and commissions, institutions will continue to enter in the second quarter. It is important to note that regulatory discussions surrounding staking are also gaining attention, especially in the United States, where doubts about whether liquid staking tokens (LSTs) constitute securities are still ongoing. Additionally, a relatively low-profile but far-reaching technological improvement is the Timely Voting Credit (TVC), which effectively curbs the skipping behavior of validator voting (rewarding validators who vote on time). What is promising is that the Solana ecosystem is no longer defined by a "set it and forget it" strategy, but is moving towards a fairer staking economy model.